Monadelphous up on bullish outlook

Monadelphous up on bullish outlook - The West Australian

UPDATE 1.25pm: Monadelphous shares surged more than 6 per cent after the company said it expected to post a 40 per cent jump in first-half revenue on the previous corresponding period and a 25 per cent lift in full-year revenue.

The forecast indicates first-half revenue of about $1.2 billion, and full-year revenue of about $2.4 billion.

Monadelphous made a net profit of $137.3 million in the year to June 30, 2012, up 44.5 per cent from the previous year.

Speaking at the company's annual general meeting, managing director Rob Velletri said capital expenditure in resources, though softening a little from the company's previous update, was expected to remain at solid levels with expenditure in the energy market continuing to grow and remaining at record levels.

"The outlook also remains robust with respect to public sector capital expenditure," he said.

"Maintenance expenditure in resources and energy is expected to grow over the coming five-year period, reflective of the volume of new projects moving into the operations and maintenance phase."

Mr Velletri said the high volume of approved projects particularly in the iron ore and LNG sectors should drive solid demand for some time.

"In terms of the immediate outlook, the company is experiencing record levels of activity from the fast-tracked execution of a number of new projects," he said.

However he also noted an across-the-board focus on cost reduction and a tightening of discretionary capital and operating expenditure by most of the company's resource sector customers.

"Margins are coming under pressure in this more competitive environment," he said.

"We are responding appropriately by paying close attention to productivity and the cost-effective delivery of our current workload."